Business and Society Exam Questions
Course Introduction
Business and Society examines the complex interactions between businesses and the broader social environment in which they operate. The course explores ethical, social, political, and environmental challenges faced by organizations, and the responsibilities businesses have towards various stakeholders including customers, employees, communities, and shareholders. Through case studies and contemporary examples, students will learn about corporate social responsibility, ethical decision-making, sustainability, regulatory frameworks, and the impact of globalization. By the end of the course, students will develop a critical understanding of the ways businesses contribute to and are influenced by societal expectations and global trends.
Recommended Textbook
Business Law Today Standard Text and Summarized Cases 10th Edition by Roger LeRoy Miller
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Chapter 1: The Legal Environment
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Sample Questions
Q1) State constitutions are supreme within their respective borders.
A)True
B)False
Answer: True
Q2) Judge Julia decides that the precedent for the case she is hearing is no longer correct due to technological changes. She overturns the precedent when she decides the case. It is most likely that her case will
A) go unnoticed by the public.
B) be thrown out of court.
C) receive a great deal of publicity.
D) be ignored by the media.
Answer: C
Q3) Statutes are laws enacted by Congress and the state legislatures and comprise one of the sources of American law.
A)True
B)False
Answer: True
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Page 3
Chapter 2: Constitutional Law
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Sample Questions
Q1) The First Amendment protects defamatory speech.
A)True
B)False
Answer: False
Q2) Jim operates Jim's Fruits & Vegetables, a small market stocked entirely with produce grown on his adjacent farm. Under what clause of the Constitution can the federal government regulate Jim's activities? What is Jim's best argument against federal regulation of his farm and business?
Answer: Under the commerce clause, at least in theory, Congress has the power to regulate any activity-interstate or intrastate-that affects interstate commerce. Thus, under that clause, it could be argued that the farmer's growing and selling of produce is subject to federal regulation because these activities affect inter state commerce. The farmer-vendor's best argument against federal regula tion of his farm and business in this problem might be that in his case these activities and their effects are purely local. But because of the economic char acter of these activi ties, and hence their effect on interstate commerce, however minimal and de spite their local charac ter, it is unlikely that a court would accept this ar gument.
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Page 4
Chapter 3: Courts and Alternative Dispute Resolution
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Sample Questions
Q1) Martha brings a suit against SafeCars, Inc. claiming that she was injured during a car crash due to defects in the car she had purchased from SafeCars. There is no evidence that Martha was injured in the accident, but the trial court awards her $1 million in damages. SafeCars appeals the decision. The appellate court will most likely
A) not modify the trial court's finding of fact because appellate courts are forbidden to look at questions of fact.
B) modify the trial court's finding of fact because the finding was clearly erroneous.
C) modify the trial court's finding of fact because the award amount was more than $25,000.
D) modify the trial court's finding of fact because the award amount was less than $5 million.
Answer: B
Q2) An answer never admits to the allegations made in a complaint.
A)True
B)False
Answer: False
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Chapter 4: Torts and Cyber Torts
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Q1) Liz trespasses on Mega Corporation's property. Through the use of reasonable force, Mega's security guard Ned detains Liz until the police arrive. Mega is liable for A) assault.
B) battery.
C) false imprisonment.
D) none of the choices.
Q2) An Internet service provider cannot be held liable for disseminating others' defamatory remarks.
A)True
B)False
Q3) To determine whether a duty of care has been breached, a judge asks how a reasonable person would have acted in the same circumstances.
A)True
B)False
Q4) To avoid liability for negligence, a business owner must protect its patrons against all risks.
A)True
B)False
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Chapter 5: Intellectual Property and Internet Law
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Q1) In 2012, Online Marketing Corporation registers its trademark as provided by federal law. After the first renewal, this registration
A) is renewable every ten years.
B) is renewable every twenty years.
C) runs for the life of the corporation plus seventy years.
D) runs forever.
Q2) Ross, an employee at Super Snowboard Company, is laid off. Before he exits Super's building, he e-mails the company's marketing campaign to Winter Sports Corporation, Super's competitor, without permission. This is
A) copyright infringement.
B) patent infringement.
C) trademark infringement.
D) a theft of trade secrets.
Q3) A beverage company that competes with Coca-Cola Company cannot call its products "Koke."
A)True
B)False
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Page 7
Chapter 6: Criminal Law and Cyber Crime
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Sample Questions
Q1) Davis points a gun at Eton, threatening to shoot him if he does not steal from his employer, Freddy's Convenience Store, and give the stolen funds to Davis. Charged with theft, Eton can successfully claim, as a defense
A) nothing.
B) duress.
C) entrapment.
D) self-defense.
Q2) Ivan signs Jeb's name, without his authorization, to the back of a check. This is
A) no crime.
B) forgery.
C) larceny.
D) robbery.
Q3) Vance points a gun at Workman and threatens to shoot him. Workman hits Vance, causing his death. Charged with homicide, Workman can successfully claim as a defense
A) nothing.
B) duress.
C) entrapment.
D) self-defense.
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Page 8
Chapter 7: Ethics and Business Decision Making
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Sample Questions
Q1) Corporations can be perceived as owing ethical duties to groups other than their shareholders.
A)True
B)False
Q2) Julia, the head executive of Fine Woolen Sweaters, Inc., is a committed Christian who strongly adheres to the Ten Commandments. One of Julia's employees is found to be stealing sweaters and giving them to a local homeless shelter. Julia is likely to A) punish the employee for stealing even though the employee's motive was benevolent. B) view the employee's actions as justified because the employee was clothing the poor. C) contribute more sweaters to the homeless shelter.
D) gently reprimand the employee without suggesting that the employee's actions were unethical.
Q3) Olaf, an executive with Pharma Product Distribution, Inc., has to decide whether to market a product that might have undesirable side effects for a small percentage of users. How should Olaf decide whether to sell the product? How does the standard of ethics that is applied affect this answer?
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Page 9
Chapter 8: International Law in a Global Economy
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Sample Questions
Q1) The United States taxes each barrel of imported oil at a flat rate. This is A) an antidumping duty.
B) a dumping duty.
C) a quota.
D) a tariff.
Q2) The Foreign Sovereign Immunities Act spells out what a "foreign state" includes.
A)True
B)False
Q3) According to the Foreign Sovereign Immunities Act, a foreign state that has committed a tort in the United States is protected from the jurisdiction of the U.S. courts.
A)True
B)False
Q4) The government of Japan sets a limit on the amount of rice that can be imported from the United States. This is
A) a dumping duty.
B) an antidumping duty.
C) a quota.
D) a tariff.
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Chapter 9: Nature and Classification
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Q1) The intention to enter into a contract is judged by objective facts as interpreted by a reasonable person.
A)True
B)False
Q2) Clay offers to pay Dot $50 for a golf lesson for Eula. They agree to meet the day after tomorrow to exchange the cash for the lesson. These parties have
A) a bilateral contract.
B) a trilateral contract.
C) a unilateral contract.
D) no contract.
Q3) Every contract involves at least two parties.
A)True
B)False
Q4) The person who makes a promise is the promisee.
A)True
B)False
Q5) A quasi contract is not a true contract.
A)True
B)False
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Chapter 9: Offer and Acceptance
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Q1) A record is an interaction between two or more people relating to business, commercial, or governmental activities.
A)True B)False
Q2) The primary purpose of the Uniform Electronic Transactions Act (UETA) is to remove barriers to e-commerce.
A)True B)False
Q3) Beta Software Company and Gamma Sales Corporation agree to follow a certain security procedure in transacting their business online. Beta fails to follow the procedure, however. Due to this failure, Beta does not detect an error in the deal, which will have a negative impact on Gamma's interest in the deal. Can Gamma avoid the effect of this error? How?
Q4) Browse-wrap terms require a user to affirmatively indicate his or her consent.
A)True B)False
Q5) An offer does not need to be communicated to the offeree to become effective. A)True B)False
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Chapter 11: Consideration, Capacity, and Legality
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Sample Questions
Q1) Refer to Fact Pattern 11-1. The next day, Sally changes her mind and again offers to deliver Tasty's products. Tasty is willing to deal, but for a new price. Sally and Tasty
A) may agree to a new contract, but it cannot include a new price.
B) may agree to a new contract that includes the new price.
C) must perform their original contract.
D) must perform the part of their original contract that is executory.
Q2) Consideration is the value given in return for a promise.
A)True
B)False
Q3) Inadequate consideration always indicates undue influence. A)True
B)False
Q4) All states require that members of certain professions to have licenses. A)True
B)False
Q5) If a contract is fully performed by all parties to it, then it is presumed to have been ratified.
A)True
B)False
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Chapter 12: Defenses to Contract Enforceability
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Q1) Julie orally agrees to assume Carlyle's debt to FunGames, Inc. Julie gets a substantial personal benefit from the agreement-Carlyle agrees to work for Julie's landscaping service for six months. Julie's oral assumption of the debt is enforceable by
A) Julie or Carlyle only.
B) FunGames only.
C) any of the parties.
D) no one.
Q2) A contract must be in writing to be enforceable if it makes performance possible only over a period of more than one year.
A)True
B)False
Q3) Words or terms in contracts that are subject to more than one reasonable interpretation can lead to bilateral mistakes.
A)True
B)False
Q4) A fact is objective and verifiable.
A)True
B)False
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Chapter 13: Third Party Rights and Discharge
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Q1) Tristan promises to paint Katy's house in exchange for Lila's promise to plant trees on Tristan's property. This is
A) a delegation.
B) an assignment.
C) a third party beneficiary contract.
D) none of the choices.
Q2) App Developers, Inc. (ADI), enters into a contract with Carmen, the chief executive officer of SalesCorp, to create an app for the firm. To fulfill the contract, ADI hires Max and ten other student interns. With respect to the contract, Max is
A) an intended beneficiary.
B) an incidental beneficiary.
C) a delegatee.
D) an assignee.
Q3) Tender is a timely offer or expression of willingness to pay a debt or perform an obligation.
A)True
B)False
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Chapter 14: Breach and Remedies
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Sample Questions
Q1) A liquidated damages provision specifies that a certain amount to be paid in the event of a future default or breach of contract.
A)True
B)False
Q2) Clarice pays Damien $10,000 to design an ad campaign for her Sweetwater Coffee Stand chain. The next day, Damien tells Clarice that he has accepted a job in New York and cannot design her campaign. She files a suit against Damien. As compensatory damages, she can recover
A) $100,000.
B) $10,000.
C) $1,000.
D) $0.
Q3) A contract may include a clause stating that no damages can be recovered for a certain type of breach.
A)True
B)False
Q4) Liquidated damages provisions are usually not enforceable.
A)True
B)False
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Chapter 15: The Formation of Sales and Lease Contracts
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Q1) Perfect Potato Chip Company makes an offer that Snack Foods Corporation would like to accept. Under the "mirror image rule" relating to offer and acceptance, an acceptance
A) may include additional terms not contained in the offer so long as they do not materially alter the agreement.
B) may include additional terms not contained in the offer that will become part of the agreement if the offeror does not object within a reasonable period of time.
C) must include only those terms and conditions contained in the offer.
D) may contain additional terms as long as all parties agree to the additional terms.
Q2) Roy's Chick'n Shack orders chicken from Standard Food Supplier, but Standard does not deliver. Roy's will probably be unable to enforce the agreement if the parties
A) did not limit the duration of the deal.
B) did not specify a payment term.
C) did not specify a quantity term.
D) have not begun to perform.
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Chapter 16: Performance and Breach of Sales Lease Contracts
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Sample Questions
Q1) Julia orders twelve violins for her music shop from Notable Notes Instrument Manufacturers. The sale is made on credit. Julia orders the violins on May 1, Notable Notes ships the violins on May 2, and Julia receives the violins on May 4. Julia sells all the violins by June 15. Julia's credit period most likely began on
A) May 1.
B) May 2.
C) May 4.
D) June 15.
Q2) In general, a buyer's duty to pay for tendered goods becomes absolute before the buyer has had an opportunity to inspect the goods.
A)True
B)False
Q3) A buyer who obtains substitute goods to replace goods that a seller did not deliver can also recover damages from the seller.
A)True
B)False
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Chapter 17: Warranties and Product Liability
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Q1) Strict liability depends on privity of contract between an injured party and a seller.
A)True
B)False
Q2) Fred goes to Carla, a knowledgeable dog breeder, and tells her that he wants to get a dog that will be good with small children. Carla sells Fred a dog. When Fred takes the dog home, it bites both his small children and causes them serious injuries. Fred can sue Carla for breach of
A) an express warranty.
B) an implied warranty of fitness for a particular purpose.
C) an implied warranty of merchantability.
D) a warranty of title.
Q3) Suppliers are generally required to expect reasonably foreseeable misuses of their products.
A)True
B)False
Q4) Sellers or lessors are liable only for products that are reasonably dangerous.
A)True
B)False
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Chapter 18: Negotiable Instruments: Transferability Liability
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Q1) Sarah has a checking account at Secure Bank. Sarah buys her roommate Sophie's two tickets to a Broadway musical for $200. Sarah writes Sophie a check for the tickets. In this situation, Secure Bank is the A) drawee.
B) indorser.
C) payee. D) drawer.
Q2) A maker of an instrument that is payable at a definite time does not have the option of paying before the stated date.
A)True
B)False
Q3) Biff signs a note "payable to the order of County Credit Union." Unless Biff has a valid defense against payment, Biff's liability on this note is A) nothing. B) primary. C) secondary. D) conditional.
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Chapter 19: Checks and Banking in the Digital Age
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Q1) Joy steals a check from Kyle, forges his signature, and transfers the check to Loco Loans, Inc., for value. Unaware that the signature is not Kyle's, Loco Loans presents the check to Metro Bank, the drawee, which cashes the check. Kyle discovers the forgery and insists that Metro recredit his account. Can Metro refuse? If not, from whom can the bank recover?
Q2) Dhani signs a check "pay to the order of Etan" drawn on Dhani's account in First State Bank and dates the check "May 1." Etan presents the check to the bank for payment on December 15. This is
A) a cashier's check.
B) an overdraft.
C) a certified check.
D) a stale check.
Q3) Under the Check Clearing in the 21st Century Act, a bank has to credit a customer's account as soon as the bank receives the funds.
A)True
B)False
Q4) The Uniform Commercial Code governs checks.
A)True
B)False
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Chapter 20: Secured Transactions
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Q1) The payment of Yves's debt to Zac is guaranteed by Yves's personal property. Their agreement identifies Yves's property by serial number. To establish Zac's interest, this is most likely
A) irrelevant.
B) not sufficient.
C) sufficient if it accurately describes the collateral.
D) sufficient unless it is too tedious to review.
Q2) A buyer in the ordinary course of business has priority over any security interest created by the seller.
A)True
B)False
Q3) The last security interest to be perfected is the first in priority over any other perfected security interests.
A)True
B)False
Q4) The method of perfecting a security interest does not depend on the classification of the collateral.
A)True
B)False
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Chapter 21: Creditors Rights and Bankruptcy
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Q1) Before filing for bankruptcy, a consumer-debtor must receive credit counseling.
A)True
B)False
Q2) Wilson wants to file an ordinary, or straight, bankruptcy. Wilson should file using A) Chapter 7.
B) Chapter 11.
C) Chapter 13.
D) his state's bankruptcy code.
Q3) A writ of execution is a writ that puts in force a court decree or judgment.
A)True
B)False
Q4) An artisan's lien is effective only if a creditor has possession of the property. A)True
B)False
Q5) Creditors can agree with a debtor to discharge the debtor's debts on payment of a sum less than that owed.
A)True B)False
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Chapter 22: Mortgages Foreclosures After the Recession
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Q1) Hill & Dale Credit Corporation makes mortgage loans to consumers secured by their principal homes. For a Hill & Dale loan to qualify as a Higher-Priced Mortgage Loan (HPML), its annual percentage rate must exceed, by a certain amount,
A) the average prime offer rate for a comparable transaction.
B) the consumer's income-to-debt ratio.
C) the percentage of income that a consumer can devote to its payment.
D) the projected increase in market value of the consumer's home.
Q2) The loan that a lender provides to enable a borrower to purchase real property is a mortgage.
A)True
B)False
Q3) Federal law encourages private lenders to modify mortgages so as to lower the monthly payments of borrowers who are in default. A)True
B)False
Q4) Recording a mortgage protects the creditor's security interest in the property. A)True
B)False
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Chapter 23: Agency Relationships in Business
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Q1) A disclosed principal is a principal whose identity is not known by the third party at the time the contract is made by the agent.
A)True B)False
Q2) Remedies of the agent for breach of duty by the principal arise out of contract and tort law.
A)True B)False
Q3) Treadwell Tire Manufacturing Company employs Uri as an agent. To terminate Uri's authority, Treadwell must notify
A) only third parties who are aware of the agency relationship.
B) the public generally.
C) Uri and any third parties who are aware of the agency relationship.
D) Uri only.
Q4) An independent contractor is an employee. A)True B)False
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Chapter 24: Employment, Immigration, and Labor Law
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Q1) The Norris-LaGuardia Act effectively declared a national policy permitting employees to organize.
A)True
B)False
Q2) The Employee Polygraph Protection Act of 1988 prohibits most private employers from doing all of the following except
A) requiring or causing employees or job applicants to take lie-detector tests.
B) using, accepting, or referring to, or asking about the results of lie-detector tests taken by employees or applicants.
C) taking or threatening negative employment-related action against employees or applicants based on results of lie-detector tests.
D) using lie-detector tests to investigate losses due to theft.
Q3) State workers' compensation laws establish a procedure for employees injured on the job to sue their employers.
A)True
B)False
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Chapter 25: Employment Discrimination and Diversity
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Q1) Sarah believes that she was rejected for a position at Trekking Travel Agency due to her race. Sarah files a suit against Trekking Travel Agency under Title VII on the basis of disparate-treatment discrimination. Sarah must show all of the following except that
A) she is a member of a protected class.
B) she applied and was qualified for the job in question.
C) she was rejected by Trekking Travel Agency.
D) other people of her race hold similar positions with other employers.
Q2) Under the Americans with Disabilities Act of 1990, an employer must hire unqualified applicants who have disabilities.
A)True
B)False
Q3) Federal law does not prohibit employers from engaging in gender-based wage discrimination.
A)True
B)False
Q4) Gender can be a bona fide occupational qualification.
A)True
B)False
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Chapter 26: Sole Proprietorships and Private Franchises
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Q1) A sole proprietor must create a separate business organization to create a sole proprietorship.
A)True
B)False
Q2) Sweet Styles, Inc., a franchisor of clothing stores, wishes to standardize the pricing practices of its franchisees that have engaged in price-cutting to increase their respective shares of the market. The most prudent action might be for Sweet to
A) mandate the prices at which its franchisees sell their products.
B) suggest the prices at which its franchisees sell their products.
C) require its franchisees to buy inventory exclusively from Sweet.
D) threaten its franchisees with a material breach of contract.
Q3) Bret buys a franchise from Comida Mexicano Ltd. If their agreement is like most franchise agreements, it will specify that Comida can terminate the franchise
A) at will.
B) for any reason.
C) for cause only.
D) for no reason.
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Chapter 27: All Forms of Partnership
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Q1) Noah and Orin do business as Personnel Partners. In most states, for purposes of suing and being sued, Personnel Partners would be treated as
A) an aggregate of the individual partners.
B) a natural person.
C) an entity.
D) a non-existent party.
Q2) Venture Capital, LP, is a limited partnership. Its limited partners include more than 150 sophisticated investors and investment professionals. A Venture limited partner loses his or her limited liability if he or she
A) acts as the firm's manager.
B) does not participate in the firm's management.
C) invests in Unified Fund, one of Venture's competitors.
D) votes on the firm's sale or dissolution.
Q3) In a limited partnership, a general partner has full responsibility for the partnership and for all its debts.
A)True
B)False
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Chapter 28: Limited Liability Companies Special Business
Forms
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Q1) When a limited liability company is dissolved, any member who did not wrongfully dissociate may participate in the winding up process.
A)True
B)False
Q2) A limited liability company must be managed by its members.
A)True
B)False
Q3) Buyers Club is an incorporated cooperative. Like other incorporated cooperatives, Buyers Club distributes profits to its owners on the basis of
A) the amount of capital they contribute.
B) the degree to which they participate in management.
C) their transactions with the cooperative.
D) the requirements of the state in which it was incorporated.
Q4) A joint venture resembles a partnership but is taxed like a corporation.
A)True
B)False
Q5) A joint venturer can be held personally liable for the venture's debts.
A)True
B)False
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Chapter 29: Corporate Formation, Merger, and Termination
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Q1) Salt Corporation wants to acquire or merge with Pepper Corporation. Salt should
A) file a plan of merger with the secretary of state.
B) file an article of merger with Pepper.
C) make a tender offer to the shareholders of Pepper.
D) make a tender offer to the shareholders of Salt.
Q2) An appraisal right is available only when a state statute specifically provides for it.
A)True
B)False
Q3) When a sale of assets amounts to what in fact is a consolidation, the acquiring corporation inherits the selling corporation's liabilities.
A)True
B)False
Q4) The U.S. Postal Service is a public corporation. A)True
B)False
Q5) A de jure corporation is one that is not properly formed.
A)True B)False
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Chapter 30: Management and Ownership of a Corporation
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Q1) Shareholders do not need to approve fundamental changes affecting the corporation before the changes can be effected.
A)True
B)False
Q2) Pursuing a new product line is a decision that would be made by shareholders.
A)True
B)False
Q3) Mickey is a director of Fine Art Dealers, Inc. Mickey is trained in art valuation. Fine Art Dealers makes several purchases in which it pays too much money for artwork. Mickey approves all the transactions without reading the details. Mickey is most likely
A) liable for breach of the duty of care.
B) not liable for breach of the duty of care.
C) liable for breach of duty of loyalty.
D) liable for violation of the business judgment rule.
Q4) A corporation's officers and other executive employees are hired by corporate shareholders.
A)True
B)False
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32
Chapter 31: Investor Protection, Insider Trading, Corp Gov
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Q1) Riley, an engineer for Shur-2-Gro Seed Corporation, learns that Shur-2-Gro has developed a corn hybrid to triple the output of any farm. Riley buys 20,000 shares of Shur-2-Gro stock. He tells Tess, who buys 15,000 shares. After the new hybrid is announced publicly, the price of Shur-2-Gro stock increases. Riley and Tess sell their shares for a profit. Under the Securities Exchange Act of 1934, liability may be imposed on A) none of these parties.
B) Riley and Tess only.
C) Riley only.
D) Riley, Shur-2-Gro, and Tess.
Q2) Olive Grove Enterprises, Inc., completes its registration process and issues a free-writing prospectus. This tells prospective investors
A) about investing freely.
B) how to write their own prospectus.
C) that they can "freely write their own ticket" to buy Olive's securities.
D) that they may obtain the prospectus at the SEC's Web site.
Q3) One of the most common forms of securities are bonds issued by corporations.
A)True
B)False
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33
Chapter 32: Promoting Competition
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Questions
Q1) Java Bean Company imports coffee beans and sells them under two-year contracts to Mellow Roast, Inc., and other coffeemakers. The contracts require that during the two-year term a coffeemaker not buy beans from Java Bean's competitors. The contracts do not limit the coffeemakers' purchase of tea or other beverage ingredients from other suppliers, however. In the second year of the contract, Mellow Roast protests that this arrangement violates antitrust law. Is Mellow Roast correct? If not, why not? If so, under which antitrust statute, or statutes, could these contracts be held illegal?
Q2) A suit is filed against Adroit Drilling Tools Corporation, alleging that the firm committed the offense of monopolization. To determine whether Adroit has monopoly power requires looking at
A) the definition of monopoly in the Sherman Act.
B) Adroit's size alone.
C) Adroit's production methods and marketing techniques.
D) the relevant market.
Q3) Monopoly power is a minor amount of market power.
A)True
B)False
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Page 34
Chapter 33: Consumer and Environmental Law
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Q1) Injured individuals can rely on the common law to obtain damages and injunctions against business polluters.
A)True
B)False
Q2) The courts have considerably scaled back the Clean Water Act's protection of wetlands.
A)True
B)False
Q3) It is a violation of federal law to destroy or deface any labeling required on a pesticide or herbicide.
A)True
B)False
Q4) Major credit reporting agencies must provide consumers with free copies of their own credit reports every twelve months.
A)True
B)False
Q5) Food labels are not required to provide standard nutrition facts.
A)True
B)False
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Chapter 34: Liability of Accountants Other Professionals
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Q1) Jaime, an accountant, contracts to perform services for Kase. Jaime acts in good faith and conforms to generally accepted accounting principles, but makes a mistake in judgment. Jaime is most likely
A) liable if Jaime failed to discover a defalcation.
B) liable if Jaime failed to discover a fraud.
C) liable if Jaime failed to discover an impropriety.
D) not liable.
Q2) Dominique, a certified public accountant, provides accounting services to Eagle Corporation. The services include preparing Eagle's financial reports and issuing opinion letters based on the reports. In 2008, Eagle falls into serious financial trouble, but neither Dominique's reports nor her opinion letters indicate this situation. Relying on Dominique's portrayal of Eagle's financial situation, Eagle borrows a large sum of money to build a new shipping facility. In lending Eagle the money, First National Bank relies on Dominique's opinion letter. Dominique is aware of this reliance. If Dominique did not engage in intentional fraud but was negligent, what is her potential liability?
Q3) A professional's gross negligence in performing a duty constitutes actual fraud. A)True B)False
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Chapter 35: Personal Property and Bailments
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Q1) A joint tenant's sale of his or her interest terminates the joint tenancy.
A)True
B)False
Q2) Property voluntarily discarded by its owner with no intention of reclaiming it is abandoned property.
A)True
B)False
Q3) Which of the following is considered personal property?
A) Stocks and bonds
B) Land
C) A garage
D) A boundary fence
Q4) A bailment must be in writing to be valid.
A)True
B)False
Q5) Constructive delivery occurs when property is physically transferred.
A)True
B)False
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Chapter 36: Real Property and Landlord-Tenant Law
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Q1) Patsy possesses twenty-four acres of remote, rugged land. Patsy has the right to use the property, including extracting silver from an existing mine, for life. Patsy also has the right to lease the land for a period not to exceed her life. Patsy's ownership interest is A) a fee simple absolute.
B) a leasehold estate.
C) a life estate.
D) the power of eminent domain.
Q2) Jacob owns five acres of land in northern California. On his land Jacob has a house and a toolshed. There are ten large maple trees around the house that were there when Jacob bought the land. Since buying the land, Jacob has planted an apple tree. Jacob's real property includes
A) the house and toolshed only.
B) the house only.
C) the house, toolshed and maple trees only.
D) the house, toolshed, maple tress and apple tree.
Q3) Real estate sales contract are often made contingent on the buyer obtaining financing.
A)True
B)False
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Page 38
Chapter 37: Insurance, Wills, and Trusts
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Q1) A constructive trust is "constructed" by a property owner to fulfill certain unique functions outside the usual bounds of a trust.
A)True
B)False
Q2) Patty, who is divorced, owns a house. She has no reasonable expectation of benefit from the life of Quinn, her ex-spouse, but she applies for insurance on his life anyway. She also obtains a fire insurance policy on the house, which she later sells. Five years later, Quinn dies and the house is destroyed in a fire. Can Patty obtain payment on either the death of Quinn or the loss of the house? Explain.
Q3) A spendthrift trust provides for a beneficiary's transfer of his or her right to future payments of trust funds.
A)True
B)False
Q4) State law may mandate that an incontestability clause be included in an insurance policy.
A)True
B)False
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